[16PacRimLPolyJ0405] What Impact Will the Revised Trade Union Law of China Have on Foreign Business?

Abstract:

Abstract: Cheap labor. Minimal regulations. Bribable officials. Foreign
corporations attracted to China because of its low cost of business have avoided the
unionization desired by the Chinese Communist Party (“CCP”) despite China’s history of
weak trade union laws and inconsistent enforcement of union mandates. However, recent
concerns of social unrest have forced the CCP to consider reforming the political tools
used to control Chinese society. The CCP wants to create social stability, avoid
independent unionization, and prevent the westernization of China. Foreign Investment
Enterprises (“FIEs”) present new challenges for labor market regulation in China with
their large number of non-unionized workers revolting at poor working conditions, as
well as FIEs’ importation of western values. The Trade Union Law amendment of 2001
affords the All-China Federation of Trade Unions (“ACFTU”) more avenues of
enforcement through which to force FIEs to unionize and obliges the ACFTU to become
a greater presence in private enterprises—especially FIEs. Moreover, the proposed
(draft) Labor Contract Law provides the ACFTU with greater oversight power through
which to monitor the actions of FIEs and Chinese workers.
The new regulatory environment providing greater legal authority to the ACFTU
does not need to cause foreign enterprises to withdraw from China out of fear of
increased unionization or further legislation. The ACFTU and CCP value harmonious
relationships over striking workers and value foreign business. Moreover, unionization
will help consolidate workers under the socialist regime of the CCP, creating a more
stable society and working environment in China, which ultimately will benefit FIEs.
China’s battle with FIEs to increase unionization is being waged by the CCP in order to
enable the CCP to control the Chinese workforce and minimize outside influence, not in
order to impose stricter conditions on foreign investment and take control over foreign
business from enterprise management.